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Bear of the Day: eXp World Holdings (EXPI)
While much of the technology sector is excelling in this market, eXp World Holdings (EXPI - Free Report) is struggling. The cloud-based real estate brokerage company currently sports a Zacks Rank #5 (Strong Sell) and faces numerous challenges.
The stock has been trending lower for nearly four years with all rallies being met with more selling, losing a total of -82% in that time. Additionally, even with low single digit sales growth projections, EXPI still boasts a premium valuation, increasing the downside risks.
Image Source: TradingView
Falling Earnings Estimates
Like the declining stock price, eXp World Holdings’ earnings revision trend has been falling month after month for several years. Earnings estimates for this year have been revised lower by -6% and earnings for next by -39%. EPS for 2025 are also expected to show a painful -72% decline to $0.08 per share.
Image Source: Zacks Investment Research
Valuation
Currently, EXPI is trading at a one year forward earnings multiple of 42x, which is below its three-year median of 62x. However, a premium earnings multiple like that is typically reserved for companies with high growth expectations, and EXPI is expecting sales growth of just 6% this year and 5% next year.
Image Source: Zacks Investment Research
Bottom Line
Although eXp World Holdings has fallen very far from its highs, it doesn’t mean the stock is going to zero. If you look all the way back to IPO, EXPI has provided a strong return. But because the growth of the past is unlikely to return, eXp stock is going through a painful repricing.
Until the market comes to terms with the new reality of EXPI’s business fundamentals it will continue to be a challenging stock to own. So, although one day, it may be a stock worth owning, based on the current setup, I think eXp World Holdings should be avoided.